(Circulated by authority of the
Minister for Agriculture, Fisheries and Forestry,
the Hon Mark Vaile MP)

CONTENTS

1. GENERAL
outline
1

2.
Abbreviations
5

3. Formal
Clauses
6

4. Explanation of
SCHEDULES
18

1

GENERAL OUTLINE

1.1 The Wool
International Privatisation Bill 1999 provides for the
registration of WoolStock Australia Limited, currently the
statutory authority known as Wool International, as a company under
the Corporations Law .

1.2 The Bill
achieves the Government’s objectives of returning control of
the wool stockpile to the registered equity holders of Wool
International .

1.3 In summary
the Bill provides for:

·
the corporatisation and privatisation of Wool International and the
change of its name to WoolStock Australia Limited. WoolStock
Australia Limited will be a public company with freely transferable
equity and a private sector board;

·
the preservation of units of entitlement of registered equity
holders;

·
the removal of the Government from the management of the wool
stockpile and the corresponding lifting of restrictions on the
manner and timing of sales of stockpile wool; and

·
the issue of shares to Wool International registered equity
holders, with each registered equity holder receiving one share in
WoolStock Australia Limited for each unit held by them.

1.4 It is
intended that if the passage of the Bill and the receipt of Royal
Assent allow, Schedule 2 will be proclaimed to commence on 1 July
1999 and that Wool International will convert to a company on 1
July 1999, the same day. This is consistent with the current
freeze on stockpile sales which expires on 30 June 1999.

1.5 The Bill
provides for the privatisation of Wool International without any
change in the legal identity of Wool International. This
means there will be no requirement for assets, liabilities,
agreements, contracts, etc to be transferred from Wool
International to WoolStock Australia Limited. Consequential
amendments are made by the Bill to the Wool International Act
1993 , which are necessary to accommodate the privatised
structure of WoolStock Australia Limited and the preservation of
the statutory basis of units of equity.

1.6 The right of
the registered equity holders of Wool International to share in the
surplus money from the sale of stockpile wool has been protected
through the retention of those parts of the Wool International
Act 1993 which provide that right. This includes the
preservation of the taxation treatment of distributions to
registered equity holders who are the original wool growers to whom
the units were issued (which retain their status as primary
production income) and the sale of units by registered equity
holders (which can still qualify for small businesses capital gains
tax relief).

1.7 WoolStock
Australia Limited will be exempt from income tax on any amounts
received from sales of stockpile wool and incidental activities in
connection with selling the stockpile wool and distribution of the
proceeds.

1.8 Wool
International will be required to establish a trust company,
referred to in the Bill as TrusteeCo, which will hold the units of
persons and shares of members who cannot, for a number of reasons,
have their units and/or shares transferred to them. These
include:

·
putative unit holders (wool tax payers entitled to receive units
who died, or companies that were wound up, before 1 September 1997,
and whose estates and creditors have not yet been fully
administered or established);

·
wrong named unit holders (unit holders whose name on the register
is not on its face, the correct name of a legal entity); and

1.9 TrusteeCo
will transfer units and shares to the unit holders, beneficiaries
or creditors once their identity or legal status has been
established.

1.10 Some registered equity
holders have used their units in Wool International as security for
loans taken out through lending institutions. These charges
will be extended to the corresponding shares which will be issued
in respect of each charged unit and to any dividends declared on
those shares if the charge on the unit extends to distributions on
the unit. The intention of this is to preserve the value of
the security which has been taken by chargees over units.

1.11 Wool International will
be required to apply to the Australian Securities and Investments
Commission to be registered as a public company limited by
shares. The application must be accompanied by the
company’s proposed constitution. The constitution must
be in a form approved by the Minister. The main features of
the proposed constitution are that:

·
WoolStock Australia Limited’s principal activities will be
disposing of the stockpile, discharging its liabilities and
distributing any surplus money to registered equity holders.
In addition, it will be able to apply up to $3 million to
investigate and sponsor new business activities; and

·
WoolStock Australia Limited will be the sole shareholder in the
trust company which will hold shares on trust for certain classes
of unit holders.

1.12 The constitution
requires the Minister to appoint the initial Chairman of the Board
of WoolStock Australia Limited and an additional 2 directors.
Further directors will be appointed by the Board following
consultation with the wool industry. The constitution will
provide for that first meeting to be held within three months of
the conversion of Wool International to WoolStock Australia
Limited.

Financial Impact Statement

1.13 The Commonwealth does
not seek to exempt any transaction effected by the Bill from
Commonwealth, State and Territory stamp duties and other
taxes. It is estimated that up to $120,000 may be levied on
the various transactions effected by the legislation. These
will be part of the expenses of the privatisation to be borne by
Wool International under section 22ZG of the Wool International
Act 1993 (as amended by the Bill).

1.14 The Bill does not
involve any other additional expenditure by the Commonwealth or
additional revenue to the Commonwealth.

2.

Abbreviations

The following
abbreviations are used in this explanatory memorandum:

ASIC
The Australian Securities and Investments Commission

AWC
The Australian Wool Commission

AWRAP
The Australian Wool Research and Promotion Organisation

AWRC
The Australian Wool Realisation Commission

Bill
The Wool International Privatisation Bill 1999

1997 Tax
Act
The Income Tax Assessment Act 1997

1936 Tax
Act
The Income Tax Assessment Act 1936

Wool International
Act
The Wool International Act 1993

3.

Formal Clauses

Part 1 - Preliminary

Clause 1 - Short Title

3.1 The Act will
be called the Wool International Privatisation Act 1999 .

Clause 2 - Commencement

3.2 The Bill
(apart from schedule 2) will commence on the day on which it
receives the Royal Assent.

3.3 Schedule 2
will commence on a date to be proclaimed or on the date six months
after the Bill receives the Royal Assent (if this is
earlier). The effect of this is that consequential amendments
to other acts (primarily the Wool International Act) will not take
effect until the date on which Wool International becomes WoolStock
Australia Limited.

Clause 3 - Schedule(s)

3.4 Clause 3
effects the consequential amendments to other Commonwealth
legislation set out in schedule 2. These consequential
amendments will not take effect until the date of Wool
International's conversion into WoolStock Australia Limited.

Clause 4 - Crown to
be bound

3.5 Clause 4
binds each of the Crown in right of the Commonwealth, each of the
States, the ACT and Northern Territory and Norfolk Island.

Clause 5 - External
Territories

3.6 Clause 5
provides for the Bill to extend to all Australian external
Territories.

Clause 6 -
Extra-territorial operation

3.7 Clause 6
provides for the Bill to also have effect outside of Australia as
well as within it.

Part 2 -
Privatisation of Wool International

Division 1
- Interpretation

Clause 7 -
Definitions

3.8 Clause 7
provides definitions and terms used in the Bill.

3.9 It is not
necessary to recite most of the definitions used in the Bill
here. However, an important term in the overall scheme of the
legislation is "conversion time". This means the date on
which Schedule 2 commences. This is the date on which Wool
International will become WoolStock Australia Limited .

3.10 Terms which are already
defined in the Wool International Act have not been defined again
in the Bill because the effect of section 15 of the Acts
Interpretation Act 1901 is that those definitions will be
incorporated into the Bill.

Division 2 - Preliminary
matters

Clause 8 -
Application for registration under Part 5B.1 of the Corporations
Law

3.11 This clause requires
Wool International to apply to register itself as a Corporations
Law company as soon as possible after the commencement of this
clause, which will be on Royal Assent.

3.12 Wool International is
also required to lodge its proposed constitution at the ASIC.
The constitution must first have been approved by the
Minister. This allows the Minister to ensure that the
constitution is in a form acceptable to the Commonwealth.

3.13 Subclause 5 gives
exemptions to Wool International from certain formalities which
must normally be complied with in registering a company.
These exemptions are:

·
Wool International does not have to supply details of every member
(shareholder) of the company with the application;

·
the application made by Wool International does not need to be in
the form prescribed by ASIC;

·
Wool International does not have to lodge any other documents with
its application other than its proposed constitution; and

·
Wool International does not have to gain the consent of its members
to effect the registration or prove that it is the body specified
in its application.

These are the
requirements of the Corporations Law which are inapplicable
to Wool International, because of its current character as a
statutory authority.

Clause 9 -
Nomination of TrusteeCo to hold shares, units etc. on behalf of
other persons

3.14 This clause provides
for the establishment of a trust company referred to in the Bill as
TrusteeCo, prior to the date on which Wool International becomes
WoolStock Australia Limited. TrusteeCo is to be wholly owned
by Wool International. A company will be nominated by the
Minister to be TrusteeCo for the purposes of the Bill. Under
the Bill the role of TrusteeCo is to:

·
replace the Chief Executive (an office which will cease to exist at
the conversion time) as holder of units on behalf of
putative equity holders;

·
hold title to units for which the current holder is
untraceable and shown as such on the register of equity
holders;

·
hold shares issued in respect of units where the units are
registered in the name of TrusteeCo on behalf of putative equity
holders;

·
hold shares issued in respect of units where the units are
registered in a name which is not the correct name of a legal
entity; and

·
hold shares issued in respect of units for which the current
holder is untraceable.

Clause 10 - Transfer
of units etc. from Chief Executive to TrusteeCo

3.15 This clause provides
that all units currently registered in the name of the Chief
Executive (those belonging to putative equity holders) transfer to
TrusteeCo immediately prior to the time of Wool International's
conversion into WoolStock Australia Limited.

3.16 A putative equity
holder is the estate of a deceased individual whose estate was
wound up prior to the date of the original creation of the register
of equity holders maintained by Wool International since 1
September 1997 and who would have been a registered equity holder
if he or she had not died, or a company that had been wound up by
that date and which would have been a registered equity holder had
it not been wound up.

3.17 Wool International is
also to record the relevant changes in the register of equity
holders operated by it to reflect this transfer of units from the
Chief Executive to TrusteeCo.

3.18 Subclause (2) also
provides that any other property held by the Chief Executive at the
time of creation of WoolStock Australia Limited will also transfer
to TrusteeCo.

3.19 TrusteeCo will
hold all such units on trust in accordance with the requirements of
the Wool International Act as amended by Schedule 2 of the
Bill.

3.20 There are a
large number of entries on the register of equity holders which
have some doubt as to the accuracy of contact details for
registered equity holders. However, in the majority of cases
these represent a very small number of units.

3.21 The intention
of subclause (3) is to vest in TrusteeCo, before the issue of
shares in WoolStock Australia Limited, all units owned by
registered equity holders with whom Wool International has never
been able to make contact (these are currently recorded in the
register of equity holders maintained by Wool International as
unclaimed entitlements ). The effect of this is to
avoid having to issue shares to persons who cannot be
contacted. It also has the advantage that those persons will
be able to claim their entitlement to such shares from TrusteeCo if
they can prove their entitlement. In the meantime, TrusteeCo
will hold the shares on trust for them.

Clause 11 -
Validation of number of units

3.22 The purpose of this
clause is to make it clear that no more units of equity in the
stockpile wool may be issued and to validate all entries on the
register as at the conversion date.

Clause 12 - Certificates in respect of
units continue to have effect

3.23 This clause clarifies
that certificates which have been issued to registered equity
holders in respect of their unit holdings continue to have effect
after the conversion of Wool International into WoolStock Australia
Limited. This is consistent with the units continuing to
exist notwithstanding the conversion of Wool International to a
Corporations Law company.

3.24 This makes it clear
that the shares which registered equity holders will become
entitled to at the conversion time are entitlements in
addition to the units already held by them. The shares do
not replace those units.

Clause 13 - Share capital

3.25 This clause gives Wool
International a share capital of $349,403.18 which will be divided
into 349,403,180 shares immediately before the conversion time.

3.26 The number of shares to
be issued matches exactly the number of units which will be in
existence at the time of the conversion of Wool International into
WoolStock Australia Limited.

3.27 A very small amount of
capital is therefore allotted to each share (0.1 cent per
share).

Division 3
- Conversion of Wool International into a company

Clause 14 -
Registration under Part 5B.1 of the Corporations Law

3.28 This clause requires
the ASIC to register WoolStock Australia Limited under the
provisions of the Corporations Law dealing with registration
of existing bodies corporate as companies.

3.29 WoolStock Australia
Limited is to be a public company limited by shares.

3.30 Subclause (2) obliges
ASIC to issue a certificate of incorporation and an ACN to
WoolStock Australia Limited.

3.31 The registration of
WoolStock Australia Limited is to take effect at the time of the
conversion of Wool International into WoolStock Australia
Limited.

Clause 15 -
Operation of the Corporations Law after conversion time

3.32 This clause provides
that following the conversion of Wool International into WoolStock
Australia Limited, any change to the share capital, name, structure
or constitution of WoolStock Australia Limited will be at the
discretion of the members of WoolStock Australia Limited subject to
its constitution, the general law and the Corporations Law
in the same manner as any other company registered under the
Corporations Law .

Division 4
- Shares in Wool International

Clause 16 - Issue of
shares to registered equity holders

3.33 This clause deals with
the issue of shares to registered equity holders. Every
registered equity holder will receive one share in WoolStock
Australia Limited (which is to be taken to be fully paid) for each
unit that the relevant registered equity holder owns.

3.34 Shares are to be issued
to different types of registered equity holders as follows:

·
in respect of persons (except TrusteeCo):

- to that
person. It will only be possible to issue shares to
registered equity holders in this category if the name on the
register of equity holders is the proper legal name of that
person.

·
to partnerships:

- where the
name on the register of equity holders of the relevant registered
equity holder is the name of a partnership then shares are to be
issued jointly to all the partners that make up that
partnership.

·
putative equity holders:

- units which
are registered at the conversion time in the name of TrusteeCo in
respect of putative equity holders will be issued to TrusteeCo.

·
unclaimed entitlements:

- if
units are registered in the name of TrusteeCo because the true
owner is untraceable (see clause 14(3) of the Bill), then shares in
respect of these units will also be issued to TrusteeCo and held by
it on trust for the true owner.

·
all other cases:

- all
remaining shares will be issued to TrusteeCo.

- shares will
be issued to TrusteeCo under this heading where the name of the
registered equity holder on the register of equity holders is not,
on the face of it, the name of a legal entity. This category
will need to be used on the issue of shares in the numerous cases
where, for instance, the name of the registered equity holder is a
trading name, or appears to be the name of a corporate entity but
that corporate entity is not registered under the Corporations
Law .

-
alternatively, this category may need to be used in the case of
individuals where (for instance) the individual's name has changed,
or is incorrect, but Wool International has not been informed of
this.

3.35 Subclause (2) provides
that any person who becomes a member of WoolStock Australia Limited
by having shares issued to them under this clause (rather than
having applied for them in the usual way) has the same rights,
privileges and benefits, duties, liabilities and obligations as any
member of any other company registered under the Corporations
Law would.

3.36 Subclause (3) says that
section 259C of the Corporations Law does not apply to the issue of
shares in WoolStock Australia Limited to TrusteeCo. This
provision is required to make it clear that TrusteeCo may hold the
shares as trustee notwithstanding that it will be a wholly owned
subsidiary of Woolstock Australia Limited. Because Woolstock
Australia Limited, as holding company of TrusteeCo, has a
contingent residual beneficial interest in the shares held on
trust, Section 259C of the Corporations Law would preclude
the issue and transfer of shares to TrusteeCo.

3.37 Subclause (4) makes it
clear that there are no voting restrictions on those shares.

Clause17 - Charges
on shares

3.38 This clause extends any
charges which are registered against units pre-existing at the
conversion time to each share issued in respect of each charged
unit and to any dividends declared on those shares. This
preserves the value of the security which has been obtained by
chargees over units.

3.39 Under subclause (5)
chargees are also entitled to be paid sums by WoolStock Australia
Limited in respect of dividends on those shares to the same extent
that they are entitled to be paid sums by WoolStock Australia
Limited in respect of distributions on the units that correspond to
those shares. Chargees can only be paid sums under this
subclause:

·
up to the amount of the secured debt; and

·
only if the registered equity holder in question has authorised
WoolStock Australia Limited (whether at that time called WoolStock
Australia Limited or Wool International) under subsection 22R(4)(b)
of the Wool International Act to make such payments in respect of
units of equity.

3.40 Under section 22P of
the Wool International Act, all units will, one month after the
final distribution has been made, be cancelled. Therefore, the
value of the security taken by chargees over units would be further
reduced if that security were not transferred so as also to attach
to the shares issued to the relevant shareholder.

3.41 For the avoidance of
doubt, subclause (3) states that if there is more than one charge
attaching to a unit then those charges, on transfer to the relevant
shares, shall have the same priority amongst themselves as they had
in relation to the charges on the units. This provision
corresponds to section 22K of the Wool International Act which
relates to charges on units.

3.42 Wool International
already creates separate registrations for any units which are
subject to a charge. WoolStock Australia Limited will, after the
conversion date, be required to issue separate share certificates
for shares that are subject to a charge and shares which are not
subject to any charges. This is to enable separate
certificates to be held by chargees where the shares are charged.
Unlike the units, the charges on shares will not be recorded on the
register of members.

Clause 18 - Dealings
by TrusteeCo with shares held for putative equity holders

3.43 This clause requires
TrusteeCo to deal with shares of putative equity holders in the
same way it would deal with units of equity held on trust by
TrusteeCo for putative equity holders under the revised sections
22H(2), 22U and 22V of the Wool International Act.

3.44 New clause 22H(2)
requires TrusteeCo to transfer shares to the person properly
entitled to them and new clause 22V states that, until the time of
any such transfer, TrusteeCo holds the shares on trust.

Clause 19 - Dealings by TrusteeCo with
shares held in respect of unclaimed units or wrong-name
units

3.45 This clause sets out
the terms of the trust of the shares that are held by
TrusteeCo. It covers shares issued in respect of both
unclaimed entitlements under clause 30(1)(d) and incorrectly named
equity holders under clause 30(1)(e).

3.46 This clause
provides that TrusteeCo is to hold on trust any dividends that it
receives in respect of those shares that it holds for untraceable
and incorrectly named equity holders. Further, TrusteeCo may
invest those dividends in the same manner it can invest sums
received by it pursuant to section 22(Y) of the Wool International
Act. Any income accruing to TrusteeCo from that investment is
to be paid to WoolStock Australia Limited.

3.47 Subclause (6) requires
TrusteeCo to transfer the shares it holds on trust, and to pay any
dividends it has received, to unit holders who have their details
amended on the register to show the correct name. Amendments
can be made to the register any time before the date one month
after the final distribution. If, at that date, TrusteeCo
still holds shares for unclaimed entitlements and incorrectly named
equity holders (because it has not been required to transfer these
shares to anyone) then it must pay to WoolStock Australia Limited
the amount of any dividends that it has received in respect of
those shares and those shares are then, by the effect of subclause
(5), automatically cancelled.

Division 5
- Taxation

Clause 20 -
Operation of CGT rules

3.48 Subclause (1)
provides that certain events occurring by or under the Bill are not
to be treated as being or giving rise to a CGT event for the
purposes of the 1997 Tax Act. This is intended to ensure, for
the avoidance of doubt, that the corporatisation and privatisation
of Wool International (including the amendments to the Wool
International Act, the issue of shares in WoolStock Australia
Limited, the creation of charges over shares and the transfer of
units and property to TrusteeCo under the Bill) does not give rise
to a CGT event that could result in a capital gains tax liability
for a registered equity holder.

3.49 The units in
WoolStock Australia Limited will continue to have the same cost
base as the units in Wool International and the shares in WoolStock
Australia Limited will have a cost base of zero.

3.50 Subclause (2)
provides that units issued in respect of wool tax paid by a person
in the course of carrying on a business are assets of, and are
inherently connected with, that business for the purposes of
applying Divisions 17A and 17B of Part IIIA of the 1936 Tax Act
after the conversion time.

3.51 Division 17A
provides rollover relief , and Division 17B provides an
exemption from capital gains tax, for certain disposals of small
business assets ( rollover assets ). To be a rollover
asset for this purpose (as defined in section 160ZZPL of the
1936 Tax Act) an asset must be an asset of a business and must be
an active asset (as defined in section 160ZZPL) at
the relevant times. An intangible asset which is
inherently connected with a business carried on by the
taxpayer is an active asset for this purpose. The
subclause ensures that the units can qualify for relief under
Divisions 17A and 17B, provided the other requirements of those
Divisions are met.

3.52 This subclause
only applies in the case of units held by the original wool grower
who paid the relevant wool tax in the course of carrying on a wool
growing business. It preserves the status quo in
respect of units acquired in the course of carrying on a wool
growing business.

Clause 21 -
Distribution in respect of units

3.53 This clause
confirms that distributions to a person in respect of units issued
in respect of wool tax paid by that person in the course of
carrying on a business are treated for tax purposes as primary
production income , ensuring that the person can qualify for
benefits available in respect of such income, such as averaging and
income equalisation and farm management deposits.

3.54 This clause
only applies in the case of units held by the original wool grower
who paid the relevant wool tax in the course of carrying on a
business. It also preserves the status quo for
distributions to such a person.

3.55 This clause
provides an exemption for WoolStock Australia Limited from income
tax in respect of amounts it derives from its activities in
connection with the holding, managing and disposing of the
stockpile wool and distributing the proceeds to registered equity
holders and shareholders, including any activities incidental to
those activities, such as temporary investment of the disposal
proceeds pending distribution.

3.56 For the
purpose of the exemption, the stockpile wool includes both wool
owned by WoolStock Australia Limited at the conversion time and
wool acquired by WoolStock Australia Limited after that time for
the purpose of facilitating the disposal of wool owned by it at the
conversion time.

3.57 The effect of
the clause is to put WoolStock Australia Limited in essentially the
same position in relation to disposal of the stockpile wool as it
would have been in if it had remained a statutory authority.

Clause 23 -
Share Capital

3.58 This clause
confirms that the creation of WoolStock Australia Limited's share
capital under clause 16 of the Bill does not cause the share
capital account to become tainted under section 160ARDM of
the 1936 Tax Act (which would have adverse tax consequences).

Division 6 - Miscellaneous

Clause 24 -
WoolStock Australia Limited not to be an agency of the Commonwealth
etc.

3.59 Because WoolStock
Australia Limited is the same legal entity as Wool International,
WoolStock Australia Limited might for some purposes, but for this
clause, be able to claim crown immunity. This clause provides
that from the time of conversion of Wool International into
WoolStock Australia Limited, WoolStock Australia Limited shall not
be a Commonwealth authority or otherwise come under the shield of
the Crown for the purposes of the Commonwealth, or a State or a
Territory unless some express provision is made to the contrary by
law of the Commonwealth, a State or a Territory.

3.60 The effect of subclause
(2) is to remove WoolStock Australia Limited's liability for
certain continuing compensation payments owing to former employees
and to leave the primary liability for those payments under the
Safety Rehabilitation and Compensation Act 1988 with
Commonwealth.

Clause 25 -
Compensation for acquisition of property

3.61 This clause is a
constitutional safety net providing an entitlement to
compensation. It provides for compensation to be paid by the
Commonwealth to a person from whom property is acquired as a result
of the operation of the Bill otherwise than on just terms. If
the Commonwealth and the person in question cannot agree on the
amount of any such compensation to be paid, the Federal Court may,
on application by the person from whom property was acquired,
determine what is a reasonable amount of compensation for the
acquisition of the property.

Clause 26 - Limited
continuation of Commonwealth guarantee

3.62 This clause is a
transitional arrangement providing for a continuation of the
Commonwealth guarantees in respect of amounts owing by WoolStock
Australia Limited where:

·
obligations have been incurred before the termination of the
guarantee; and

·
where the relevant obligation has not been varied after the
conversion time, unless the consent of the relevant Ministeris
obtained.

3.63 The circumstances in
which the Commonwealth guarantee will continue are where amounts
fell payable by Wool International before the conversion time and
the repayment of such amounts would have been guaranteed under
subsection 53(7) of the Wool International Act had it not been
repealed by the Bill.

3.64 Subsection 53(7) of the
Wool International Act provides for the guarantee of monies which
become payable by Wool International to persons other than the
Commonwealth where those sums are owing as a result of the
performance by Wool International of its functions in relation to
the stockpile wool, its accumulated debt or any currency hedging
contracts entered into by Wool International for those purposes,
provided that such hedging contracts were entered into in
accordance with section 54 of the Wool International Act (also to
be repealed by the Bill).

Clause 27 - Limited
continuation of the repealed section 22ZG

3.65 This clause provides
for the continuation, in certain circumstances, of Wool
International's duty to provide assistance to the Government in
respect of the privatisation of Wool International.

3.66 Section 22ZG of the
Wool International Act provides for assistance by Wool
International in connection with its privatisation. The type
of privatisation contemplated by the section (transfer of assets
and liabilities to a new company) is not the means of privatisation
effected by the Bill. This section is repealed and replaced
with an obligation to assist with privatisation of the type now
being implemented. However, the effect of clause 73 of the
Bill is to preserve WoolStock Australia Limited's duties to provide
assistance in respect of any directions and in relation to the
payment of expenses given to Wool International by the relevant
Minister before the conversion date and in relation to the payment
of expenses.

3.67 The saving of section
22ZG(1)(c) of the Wool International Act could require WoolStock
Australia Limited to pay monies to the Government in certain
circumstances where the final expenses of the privatisation are not
known at the conversion date.

Clause 28 -
Accounting records

3.68 This clause requires
the accounts and records maintained by Wool International to be
treated as accounts and records prepared or kept by WoolStock
Australia Limited for the purposes of the Corporations
Law .

3.69 The effects of the
clause are that:

·
WoolStock Australia Limited is required to keep such accounts and
records for a period of seven years after the transactions covered
by the records are completed (see section 286(2) of the
Corporations Law ). WoolStock Australia Limited would
not otherwise be required to keep those records for that time
period (because the Commonwealth Authorities and Companies Act
1997 would not apply to WoolStock Australia Limited after the
conversion date); and

·
the directors of WoolStock Australia Limited will have rights of
access to those accounts and records by virtue of section 290 of
the Corporations Law . The directors of WoolStock
Australia Limited would otherwise not have automatic right of
access to the accounts and records of Wool International.

3.70 Subclause (b)
states that annual reports and financial statements prepared by
WoolStock Australia Limited under the Commonwealth Authorities and
Companies Act 1997 or section 67 of the Wool International Act are
to be treated as financial reports of WoolStock Australia Limited
for the relevant year. The advantages for deeming such annual
reports and financial statements to be financial reports for
Corporations Law purposes is to allow ASIC to maintain a
more complete and transparent historical record of the activities
of WoolStock Australia Limited throughout the history of its
continued existence as a single entity when it was called either
Wool International, ARC or AWRC.

Clause 29 - Regulations

3.71 This clause provides
the power for the Governor-General to make regulations under the
Bill to prescribe matters for anything required or permitted to be
prescribed by the Bill or which is necessary or convenient to give
effect to the Bill. Particular mention is made of the fact
that regulations can be made of a transitional or saving nature
which may be required to assist in the restructuring of Wool
International and its conversion into WoolStock Australia
Limited.

4.

Explanation of
Schedules

Schedule 1 -
Amendments Commencing on Royal Assent

Wool
International Act 1993

The purpose of Schedule 1 to
the Bill is to make changes to the Wool International Act which do
not relate directly to its privatisation, and should be made at an
earlier time.

Item 1 - Section 18

4.1 This item
changes the end date of the current freeze on sales of stockpile
wool to correspond with the date Wool International becomes
WoolStock Australia Limited.

Item 2 - Paragraph 22ZG(1)(a)

4.2 This item
re-aligns the obligations of Wool International to cooperate with
the Government in the privatisation of Wool International to
reflect the revised process which is being followed to effect the
privatisation.

Item 3 - Section
66

4.3 This item
obliges Wool International to give contact data for wool-taxpayers
to AWRAP. The purpose of this is to make available to AWRAP
the name and address (but not other particulars) of wool tax-payers
which were collected by Wool International and kept in the register
of wool tax-payers maintained under section 66 of the Wool
International Act. That section will then be repealed at the
conversion time.

Schedule 2 -
Amendments Commencing at the Conversion Date

Wool
International Act 1993

The main purpose of Schedule 2
to the Bill is make amendments to the Wool International Act which
are required in order to properly give effect to the new legal
structures put in place as part of the conversion, renaming and
privatisation of WoolStock Australia Limited. The remaining
provisions of the Wool International Act will be restricted to
those setting out the continuing rights of registered equity
holders who, after the conversion time, continue to hold units in
WoolStock Australia Limited. Leaving these rights in the Wool
International Act ensures that the units remain essentially the
same as at present, and continue to have a statutory basis.

Item 1 - Title

4.4 This item
changes the full title of the Wool International Act so as to make
it clear that the Wool International Act deals only with units of
equity.

4.5 The Bill,
not the Wool International Act, deals with all legislative rules
governing the shares in WoolStock Australia Limited.

Item 2 - Section 2

4.6 This item
repeals the commencement section of the Wool International Act
which is no longer needed as it refers to parts of that Act which
are repealed by the Bill.

Item 3 - Section 3

4.7 This item
repeals section 3 and inserts a new section 3 of the Wool
International Act to make it clear that it will, from the date of
the conversion of Wool International into WoolStock Australia
Limited, only deal with units of equity and will not govern
shareholdings in WoolStock Australia Limited.

Item 4 - Section 4

4.8 This item
adds some further definitions to the Wool International Act which
are needed because of other amendments made to that Act by this
schedule . It is not necessary to recite those
definitions here.

Item 5 - Sections 5, 5A and 6

4.9 This item
repeals Sections 5, 5A and 6 of the Wool International Act because,
once that Act has been amended by the Bill, it will not be
necessary to refer to wool-taxpayers and to the accumulated
debt.

Item 6 - Parts 2, 3 and 4

4.10 This item repeals Parts
2, 3 and 4 of the Wool International Act. Part 2 of the Wool
International Act because the status, functions and powers of Wool
International will no longer be relevant after the date of
conversion of Wool International into WoolStock Australia
Limited.

4.11 Part 3 of the Wool
International Act is repealed because after the conversion of Wool
International into WoolStock Australia Limited it will not be
appropriate for Wool International to provide the Minister with a
copy of its corporate plan.

4.12 Part 4 of the Wool
International Act is repealed because the stockpile wool will not
require disposal according to a schedule of disposal after Wool
International's conversion into WoolStock Australia Limited.

Items 7 and
8 - Section 22A and 23B(1)

4.13 These items change the
references to Wool International to WoolStock Australia Limited in
these sections of the Wool International Act.

Item 9 - Sections 22C, 22D and 22E

4.14 This item repeals these
sections of the Wool International Act because it will not be
necessary to collate data on wool-tax-payers or to allocate further
units of equity after the date of Wool International's conversion
into WoolStock Australia Limited.

Item 10 - Section 22F

4.15 This item changes the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

Item 11 - Section 22G

4.16 This item repeals
section 22G of the Wool International Act and replaces it with a
similar clause dealing with the calculation of the amount of each
distribution. The denominator in the formula is the number of
units which have been allotted and will be on issue at the
conversion time.

Items 12, 13, 14 and 15 - Sections 22H and
22I

4.17 These items change the
references to Wool International to WoolStock Australia Limited in
these sections of the Wool International Act.

Item 16 -
After subsection 22H(2)

4.18 This item adds a new
subclause 22H(2A) which is required to oblige TrusteeCo to transfer
unclaimed units held by it on behalf of an untraceable equity
holder to the relevant equity holder if that person can properly
identify their entitlement to the units in question.

Items 17, 18, 19, 20, 21, 22, 23, 24 and 25
- Sections 22H and 22I

4.19 These items change the
references to Wool International to WoolStock Australia Limited in
these sections of the Wool International Act.

Items 26, 27, 28, 29, 30, 31, 32 and 33 -
Section 22J

4.20 These items change the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

4.21 The reference to the
Chief Executive is also amended in this section of the Wool
International Act so as to refer to TrusteeCo established by the
Bill. This is because, on the date of Wool International's
conversion into WoolStock Australia Limited, all of the units of
equity held by the Chief Executive will vest in the new TrusteeCo,
to be held on the same trust terms.

Items 34 and
35 - Section 22K

4.22 These items change the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

Item 36 - Section 22KA and
Section22KB

4.23 This item adds new
clause 22KA to the Wool International Act to make it clear that a
registered equity holder is not a member of WoolStock Australia
Limited by reason of being a registered equity holder (they will be
members of WoolStock Australia Limited by virtue only of their
shareholdings in WoolStock Australia Limited).

4.24 This item also adds new
clause 22KB to the Wool International Act to provide that the
amount of a distribution to be made by WoolStock Australia Limited
to registered equity holders, shall be a debt in incurred by
WoolStock Australia Limited at the end of the operative day for
that distribution (see new subclauses 22P(4) and (5)) and will be a
provable debt if winding up proceedings are later started in
respect of WoolStock Australia Limited.

4.25 New clause 22KB also
states that the claims of registered equity holders to
distributions shall have a priority lower than that of all other
classes of unsecured creditors in any winding up of WoolStock
Australia Limited.

Item 37 - Section 22L

4.26 This item changes the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

Item 38 - Section 22M

4.27 This item changes the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

Item 39 - Section 22MA

4.28 This item allows
WoolStock Australia Limited to dispose of units after 6 years where
WoolStock Australia Limited has reason to believe that the
registered address of the relevant registered equity holder is
incorrect and WoolStock Australia Limited has been unable to
communicate with the registered equity holder for at least 6
years.

4.29 In this event,
WoolStock Australia Limited can transfer the units to the ASIC, in
the same way that a company is able to dispose of securities where
the company has similarly been unable to contact the owner of the
securities.

4.30 This amendment is
intended to supplement clause 36 of the Bill which effectively
provides for WoolStock Australia Limited to cancel any shares still
held by TrusteeCo at the date of the final distribution.

Item 40 -
Part 4B (heading)

4.31 This item amends the
heading of this part so that it is clear WoolStock Australia
Limited is only to distribute surplus money to
registered equity holders. Surplus money is defined in
section 22P of the Wool International Act (as amended by this
schedule to the Bill).

Item 41 -
Section 22N

4.32 This item changes the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

Item 42 - Sections 22O, 22P and 22Q

4.33 This item restates the
provisions of the Wool International Act in respect of
distributions by WoolStock Australia Limited to registered equity
holders.

4.34 New clause 22P(2) is
the equivalent to repealed subsection 22O(1) and paragraphs
22O(2)(b) and (c). The subclause obliges WoolStock Australia
Limited to distribute its surplus money by way of one or
more interim distributions and a final distribution to be made as
soon as possible after the end of the financial year in which the
last stockpile wool is disposed of.

4.35 New subclauses 22P(4)
and (5) provide the mechanics by which WoolStock Australia Limited
is to pay distributions.

4.36 New subclause 22P(7)
provides that units of equity will be automatically cancelled after
the final distribution has been made. This is because once
the final distribution has been made there are no further rights
that can attach to the units and therefore the units do not need to
continue to exist.

4.37 Surplus money is
defined in new subclause 22P(1) as money that WoolStock Australia
Limited is not required to set aside for payment or application by
it (other than for payment of distributions to equity
holders). Moneys in this category will include any profits
which are required to be set aside for payment as dividends to
shareholders. Whether any profit is earned by WoolStock
Australia Limited will depend on the application of accounting
standards, particularly having regard to the opening value in the
accounts of stockpile wool. Apart from this, the concept of
surplus money is the same as the concept of money not required
by Wool International for any other expenditure in the repealed
subsection 22O(1).

4.38 New subclause 22P(3)
provides that the amount of each distribution is to be determined
by WoolStock Australia Limited. This is the equivalent of
repealed subsection 22Q(1). New subclauses 22P(5) and (6) set
out the mechanics to be followed for notifying distributions,
namely publication of a notice in a newspaper, replacing the
mechanics in repealed sections 22Q (namely publication of a notice
in the Gazette ), which would no longer be appropriate.

Item 43

4.39 This item changes the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

4.40 This item also repeals
subsection (2) and inserts a new subsection (2) so that the cross
reference in the subsection refers to the new clause 22P.

Items 44, 45, 46
and 47 - Section 22R

4.41 These items change the
reference to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

Items 48 and 49 - Section 22S

4.42 These items change the
reference to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

Item 50 - Part 4C (heading)

4.43 This item changes the
heading to this part because the references in this part to the
Chief Executive are to be amended to TrusteeCo .

Item 51 - Section 22T

4.44 These items changes
references made to the Chief Executive in this section to
TrusteeCo .

Item 52 -
Section 22U

4.45 This item replaces the
parts of the Wool International Act which gave the Chief Executive
power to deal with units owned by putative equity holders.
That power is now to be held by TrusteeCo which, in dealing with
those units will no longer be subject to Ministerial direction (as
this would be inappropriate within the new structures to be adopted
for WoolStock Australia Limited and the wool stockpile).

4.46 TrusteeCo will continue
to deal with the units of putative equity holders subject to the
same criteria to which the Chief Executive was subject under the
Wool International Act before amendments were made to that Act by
the Bill. This means that:

·
in respect of individual putative equity holders:

- units can
only be transferred to, first, their creditors and, secondly, the
beneficiaries of their estate.

·
in respect of corporate putative equity holders:

- units can
only be transferred to, first, the company's creditors and,
secondly, the former shareholders of the company.

Item 52 - Section
22V

4.47 Section 22V is repealed
by this item as the section provides for the determination by the
Minister of guidelines for the exercise of the Chief Executive's
duties under subsection 22(2) before its amendment by the
Bill. Such a power is no longer appropriate.

4.48 This item states that
TrusteeCo holds the unclaimed units of untraceable equity holders
on trust for them until it is able to transfer the units to the
equity holder under subclause 22H(2A) once the relevant person has
properly identified themselves.

Item 53 - Part 4D (heading)

4.49 This item changes the
heading to this part is amended because the references in this part
to the Chief Executive are to be amended to
TrusteeCo .

Items 54, 55 - Sections 22W and X

4.50 These items change
references made to the Chief Executive in these sections to
TrusteeCo .

Items 56 and
57 - Section 22Y

4.51 These items change
references made to the Chief Executive in these sections to
TrusteeCo .

4.52 These items also change
references made to Wool International to WoolStock Australia
Limited in these sections of the Wool International Act.

Item 58 - Section 22Z

4.53 This item transfers the
obligations of the Chief Executive to TrusteeCo. Where
TrusteeCo receives monies from distributions in respect of units
held for putative equity holders, then those monies must be paid to
the same persons entitled to receive those units under the new
clause 22H(2) of the Wool International Act.

Item 59 - Section 22ZA

4.54 This item says that any
trust monies still held by TrusteeCo one month after the final
distribution has been made shall be paid to WoolStock Australia
Limited.

4.55 The effect of this is
to allow TrusteeCo to dispose of any remaining monies still vested
in it when it ceases to have a role to play when all units of
equity have been cancelled under new clause 22P(7) of the Wool
International Act.

Item 60 -
Parts 4E, 5 and 6

4.56 This item repeals these
parts of the Wool International Act because they deal with the
internal procedures and corporate governance of Wool
International. When WoolStock Australia Limited has been
registered as a Corporations Law company, these provisions
will no longer be required.

Items 61, 62, 63 and 64 - Subsections
43(2), 44(1), 44(2), 46,

4.57 These items change the
references to Wool International to WoolStock Australia Limited in
these sections of the Wool International Act.

Item 65 - Sections 47, 48, 49 and
50

4.58 These items repeal
these sections of the Wool International Act because they contain
restrictions on the manner in which Wool International may act
which it would be inappropriate to impose on a Corporations
Law company.

Item 66 - Section 52

4.59 This item allows the
Commonwealth to deduct the expenses it incurs in collecting wool
tax from the payment of that wool tax to WoolStock Australia
Limited.

Item 67 -
Sections 53, 54, 55 and 58

4.60 These sections of the
Wool International Act are to be repealed because they contain
restrictions on the manner in which Wool International may act
which it would be inappropriate to impose on a Corporations
Law company.

Items 68, 69 and 70 - Section 59

4.61 These items change the
references to Wool International to WoolStock Australia Limited in
this section of the Wool International Act.

4.62 Subsection 59(2) of the
Wool International Act is to be repealed because it is unnecessary
to restrict the power of WoolStock Australia Limited to delegate
its powers under common seal only.

Item 71 - Sections 60, 61, 62, 63, 64, 65,
66, 66A and 67

4.63 This item repeals these
sections of the Wool International Act because they contain
restrictions on the manner in which Wool International may act
which it would be inappropriate to impose on a Corporations
Law company.

Items 72 and 73 - Sections 73 and
74

4.64 These items repeal
these sections of the Wool International Act because they refer to
the winding-up of Wool International which would have been required
had Wool International not been privatised in the manner now
contemplated in the Bill. Because Wool International is to be
converted into WoolStock Australia Limited, it is no longer
necessary to provide for the winding up of Wool International as
envisaged in the Wool International Act before its amendment by the
Bill.

Wool Tax
(Administration) Act 1964

Item 74 -
Paragraph 8(4)(a)

4.65 This item repeals this
paragraph. This means that WoolStock Australia Limited will
not have the information privileges that Wool International has at
present under the Wool Tax (Administration) Act 1964 .
It would not be appropriate for a privately owned Corporations
Law company to have such privileges.